SHP-1 is an SH-2 domain containing-protein tyrosine phosphatase expressed predominantly in hematopoietic cells. It is a pivotal negative regulator of signaling as demonstrated by the association of SHP-1 deficiency with the murine "motheaten" phenotype, characterized by hyper responsiveness of the motheaten hematopoietic cells to a variety of extracellular stimuli. We and others have shown that SHP-1 functions by associating such membrane receptors through binding of its SH2 domains to specific phosphotyrosine sites in the receptor cytoplasmic region and dephosphorylating key substrates, including the Jak family kinases. Our recent studies demonstrate an intrinsic Jak- binding activity at the N-terminus of the phosphatase and functions independently of the phosphotyrosine binding capacities of the SHP-1 SH2 domains. It may allow SHP-1 recruited to the receptors to specifically target the kinases for dephosphorylation without affecting other phosphotyrosine molecules in the receptor complexes. Since it specifically binds to all Jak family members, we hypothesize that a conserved SHP-1 docking site exists in all Jak kinases and is required for SHP-1 dephosphorylation of the kinases. Importantly, we found that reduced SHP-1 interactions with the Jak family member Tyk2 are associated with the genetically transmitted human luekemic disease familial hemophagocytic lymphohistiocytosis (FHLH). Since SHP-1 appears to be normal in these individuals and that the defect affect only SHP-1 interaction with Tyk2, we hypothesize that a defect in Tyk2 or cellular factors specifically affecting Tyk2 causes reduced SHP- 1/Tyk2 interactions in FHLH and contribute to the pathogenesis of the disease. We propose to 1) define the region in Tyk2 that interacts with SHP-1 and characterize its role in SHP-1 dephosphorylation of the kinase; 2) characterize the molecular defect that causes reduced SHP-l/Tyk2 interactions in FHLH. These studies will make significant contributions toward achieving our long term objective of elucidating the physiological roles of SHP-1 in hematopoietic cells and defining its involvement of hematopoietic diseases.